Editorial Board
Risky Banks Are Regulators’ Fault
Policymakers squandered their chance to propose a serious increase to capital.
Better luck next time.
Photographer: Graeme Sloan/Bloomberg
It’s understandable that bank regulators, facing zealous industry opposition, are retreating from their effort to require the biggest lenders to fund their assets with more equity. After all, there hasn’t been a major blowup in 18 months and the banks insist they have more than enough capital.
The problem is that it isn’t true. Without stronger rules in place, the odds of another financial crisis — and massive bank bailouts — will continue to grow.